BRAND AUDIT
Prepared by: Farah Barazi Tareq Siam Wajih Jarnane
Brand Summary: In ancient Greek mythology, "Nike" referred to the winged goddess of victory, symbolizing 'honored conquest' on the battlefield. When Phil Knight and Bill Bowerman founded Nike in 1972, they aspired to instill this myth in each of products. Initially, Nike focused on high quality running shoes but quickly branched to all types of sportswear. Their aim was not only to help the world’s greatest athletes find new levels of achievement, but to also morph the average individual into a new realm of Nike athleticism. Knight and Bowerman wanted individual consumers to believe that by buying Nike, they would achieve happiness, success and power. As a profit-driven enterprise, it uses myth in its design, advertising and branding strategies to interpolate its customers into purchasing merchandise.
Store Layout Techniques The design of the NikeStore utilizes standard in-store techniques to increase the probability of customer purchases. When walking into the store, the most striking element is its highly structured and symmetrical layout. Each sport is given its own section, which is organized by product-type and color. It is made to appear that there are tiny stores within one larger store. This is also achieved by the wall and floor color schemes, which also changed depending on the sport displayed. Swimming, for example, had aqua walls and a blue rubbery floor, similar to what you would find next to an actual swimming pool.
Segmentation These tactics served three purposes. First, by having different sections for each sport, Nike generated additional markets for each consumer. It facilitated customers' belief that they need clothing for every sport they were involved in. It made consumers forget that Nike running shirts serve the same purpose as Nike yoga shirts. The goal is to create additional markets in one consumer. A second purpose is it disembodies the potential consumer from the store. By designing a swimming section actually appear like a swimming pool, Nike facilitates spending by creating space that appeals to the imagination. This strategy is also connected to the reason Nike wanted their walls, floors and ceilings to be dark and unsuspecting. Nike wants the focus to be on the merchandise and decor, which takes the consumer away from the store and into an imaginary, mythological realm. Finally, the third purpose that this strategy serves is to create a maze-like atmosphere. This is especially characteristic of the bottom floor of this NikeStore. By having different sections, the consumer maneuvered in disjointed confusion. This technique forces the consumer to view all the merchandise before
finding the exit. Thus, Nike's use of color, space and architectural strategies are designed to reap profits.
The advertising strategies in the NikeStore are more complex than its design tactics. Although both aim to mystify the consumer into purchasing Nike wear, advertisements are a more apparent ploy to interpolate the customer. The individual may be unable to know the meanings behind each but they are drawn to them because they give "'life' and 'meaning' to otherwise meaningless or lifeless objects."
Athletes The first NikeStore advertising campaign captured professional athletes dressed in sport specific Nike gear. These were found both in video advertisements as well as in larger than life-sized, lit posters, with little or no writing, except of course for the "Nike Swoosh." These posters were photographs of two different categories of athletes. The first category featured color photos of present day Olympic athletes, which targeted a younger audience who might feel a sense of achievement in buying the clothes of an Olympian. The second groupings were black and white photos of high performance athletes in their younger years. These photos likely targeted an older audience who might feel a sense of nostalgia and comfort by seeing their favorite childhood hockey players such as Kovalchuk and Naslund. These advertisements capitalized on the power of suggestion. Nike knows they do not need to show their products because the myth associated with the athletes speak for themselves. Just by having these athletes wear Nike clothes, they believe they can trust the Nike image.
Science The second advertising campaign that the NikeStore utilizes is product description in both video and poster forms. This tactic appears to be in opposition to the first because the advertisements describe the function, design, and technical merits of a particular Nike product, as well as displaying an oversized visual of it. Although it is less apparent, these advertisements do embody a certain myth. For items such as the Nike One golf ball, Nike knows that the average consumer would not notice the difference between Nike balls over the competitors. By using technical jargon, Nike exemplifies the myth of science which stems from the Enlightenment era and the scientific revolution. Nike knows that science is trusted as an objective measure and is thus a powerful marketing tool to entice consumers to purchase products.
Anti-Corporate Appeal
The final strategy that the NikeStore uses is "graffiti" advertising, which was found as a display in the women's casual-wear section. The design had red painted walls, cursive font and words such as "zoom, speed, rush, and burn it", across the glass. This type of advertising is quite different from most capitalist corporations. Nike is using an anarchist, graffiti aesthetic to reinforce the company's hip, antiestablishment image. These advertisements interpolate and thus falsely mystify the consumer into believing that Nike is unlike other greedy corporations. However, it is apparent that Nike is trying to diversify its audience by attracting a new anti-Nike market to increase their sales. Jordan & Nike Michael Jordon is the most recognized strategy of Nike branding. As Nike founder Bill Knight stated, "you can't explain much in 60 seconds, but when you show Michael Jordon, you don't have to." He is a "superbrand," embodying a rare combination of power and prestige with humanism and morale. When Nike marketed their new line of clothing named AIR JORDON, which displayed not only a Nike Swoosh but also an emblem of a miniature Jordan suspended in air, Nike knew that every message Jordan had been associated with, would streamline directly into the merchandise. The NikeStore utilizes the Jordan myth and brand name, not only by displaying he Swoosh on walls, as clothes hooks, and on all products, but also by creating an interactive portal into basketball history. The user spun an actual basketball in order to light up the AIR JORDAN shoe from a given year. This was the only interactive display in the NikeStore. In fact, after a new renovation, the store felt it was the only display worth keeping. This clearly shows that Michael Jordan is a gem to the Nike brand. Nike understands that customers will purchase more merchandise by associating Jordan ideals with Nike products.
Toolbox Method: Company: Financial and Management Information:
www.nikebiz.com is a real communication platform for all financial and business information regarding t Brand. A well structured website especially made for all business stakeholders.
Valuation Measures Market Cap (intraday):
41.35B
Enterprise Value (Nov 26, 2010):
36.64B
Trailing P/E (intraday):
21.85
Forward P/E (May 31, 2012):
17.55
PEG Ratio (5 yr expected):
1.89
Price/Sales:
2.13
Price/Book:
4.28
Enterprise Value/Revenue:
1.89
Enterprise Value/EBITDA:
12.46
Financial Highlights Fiscal Year Fiscal Year Ends: Most Recent Quarter:
May 31 Aug 31, 2010
Profitability Profit Margin:
10.07%
Operating Margin:
13.23%
Management Effectiveness Return on Assets:
11.77%
Return on Equity:
20.83%
Income Statement Revenue:
19.39B
Revenue Per Share:
40.07
Qtrly Revenue Growth:
7.80%
Gross Profit:
8.80B
EBITDA:
2.94B
Net Income Avl to Common:
1.95B
Diluted EPS:
3.96
Qtrly Earnings Growth:
9.00%
Balance Sheet Total Cash:
4.69B
Total Cash Per Share:
9.81
Total Debt:
583.00M
Total Debt/Equity:
6.04
Current Ratio:
3.35
Book Value Per Share:
20.22
Cash Flow Statement Operating Cash Flow: Levered Free Cash Flow:
2.67B 1.90B
Corporate: (Values and philosophy) The 11 Nike Maxims: 1. "It is our nature to innovate." The company sees innovation as one of its core organizational competencies. 2. "Nike is a company." 3. "Nike is a brand." The "swoosh" logo is instantly recognizable around the world. Nike sees this as the symbol of its global leadership. It will enter only those markets that it thinks it can dominate. It says: "if we can’t lead it, we don’t need it." 4. "Simplify and go." Nike products have short life-cycles in terms both of technology and fashion. The company believes that making quick yet skilful decisions is key to its success. This aspect of Nike’s vision, together with the seventh maxim, is particularly powerful in articulating the company’s hugely successful use of emergent strategy. 5. "The consumer decides." The company is keenly aware of the sophistication of its customers and it treats them as its key stakeholder. 6. "Be a sponge." Employees at Nike are encouraged to be curious and open to new ideas, whatever their source. 7. "Evolve immediately." Nike sees itself as being in perpetual motion""viewing change as a key source of innovation. This attitude can easily be observed in the wide range of products that Nike offers its consumers. It is another example of the company’s use of emergent strategy to good effect. 8. "Do the right thing." Nike thinks of itself as a responsible global citizen, embracing the stakeholder view of corporate social responsibility. It encourages its people to be honest and transparent and to promote diversity and sustainability. 9. "Master the fundamentals." All the innovation in the world is useless if you can’t put it into action. A crucial part of Nike’s success is its ability to refine its performance""the recent growth in profits suggests that it’s achieving this.
10. "We are on the offense""always." To stay ahead in an extremely competitive environment, Nike urges its people to act like leaders in their field to achieve victory. 11. "Remember the Man." The late Bill Bowerman is still held in high esteem throughout Nike, both for his understanding of athletes" needs and for his innovative spirit.
Brand: (Images and symbols) Nike's advertisements can be interpreted in countless dimensions because of their denotative and connotative meanings. This makes them powerful marketing tools because their meanings are highly ambiguous and thus ultimately have personal meaning with every individual consumer. However, the reality remains that the influence of advertising is negligible in comparison to Nike's branding enterprise. Over the last two decades there has been a paradigm shift in the marketing industry. Where it was once standard practice to market products, corporations now market brands. The Nike Swoosh is arguably one of the most recognizable and demanded logos in the world. Similarly to the name "Nike," the Swoosh is rooted in ancient Greek mythology, representing the wing of the Greek Goddess, Nike, which, as previously mentioned, 'embodies the spirit of the most courageous and chivalrous warriors at the dawn of civilization." The reality of the Nike Swoosh is that it is nothing more than a meaningless check mark. Thus, Nike must embed its myth by associating it with superstar athletes, business endorsements and community projects. As a corporation, Nike uses its NikeStore's as outlets to remind consumers what Nike and the Nike Swoosh represent worldwide.
Products: Nike offers a wide range of shoe, apparel and equipment products, all of which are currently its top-selling product categories. Nike started selling sports apparel, athletic bags and accessory items in 1979. Their brand Cole Haan carries a line of dress and casual footwear and accessories for men, women and children. They also market head gear under the brand name Sports Specialties, through Nike Team Sports, Inc. They sell small amounts of plastic products to other manufacturers through Nike IHM, Inc. Bauer Nike Hockey Inc. manufactures and distribute ice skates, skate blades, in-roller skates, protective gear, hockey sticks and hockey jerseys and accessories.
The Fingerprint Method:
Nike is perfectly a global brand, mixing all the elements of the Fingerprint Method; The brand is focusing on all the different performance sides:
Time: *
The Greek name refers to victory that is a timeless achievement that stays in records
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Write the future campaign: with the participation of the world’s best players and athletes, The campaign marks the first stage of a journey that ultimately see fans around the world write their own future through experiences that put them at the center of the action.
Body: The Nike’s products represent a real identity for the brand. The Innovation policy followed by Nike may be difficult for competitors to imitate, their strong emphasis on R&D leads to continuous improvement in products.
Project: Victory has always been a project, and Nike’s most significant myths is victory that insures fame and notoriety.
Space: Both tangible and intangible space are invaded by Nike, you find Nike billboards everywhere you go, but Nike also has cultivated a wide conceptual field inside each of its clients.. All these elements are beneficial for prosperity of the brand, displaying the experience of the sportswear’s monster in megastores as the NIKETOWN.
Norms: "If you have a body, you are an athlete" is the beginning of breaking the ancient rules of competition. The brand was created to put its clients in the center of action, giving them impulsions to compete, fight, and win, by its slogan: “just do it”.
Relation: Nike also branded itself by associating the Swoosh with community projects. The Nike website features an e-newsletter called Nike Responsibility. The Winter 2004 issue displayed Nike contribution such as "Giving Workers a Voice," "Poverty Alleviation" and also "Increasing Physical Activity Among Young People". The film stated, "Children have shorter life spans than their parents because of inactivity and diet" — "Here's how we're
doing". It then proceeded to list its Head Start Initiatives, PE2Go initiatives, and Custom Programs. It cannot be denied that these programs should be commended because they are helpful to communities but it also must be understood that these contributions are not selfless acts. Nike is generating huge profits from the images these initiatives portray. With every publicity stunt, newsletter, or television advertisement that mentions these Nike programs, the Swoosh and the Nike brand become embedded in the myth of good-heartedness and generosity. Nike thus extends itself from a realm of products and profits to a charitable foundation. "If you have a body, you are an athlete"
Position: The famous slogan: “Just do it” position Nike as a coach, a tutor that trains its clients to a better way of practice.
Systematic positioning "It is our nature to innovate." The company sees innovation as one of its core organizational competencies. Innovation is integrated in all levels of the business: Production, Human Resources, Distribution… In terms of product differentiation, NIKE is leading the market. The only competitor nearly has an identical business is Adidas-Solomon. Product differentiation is healthy in the footwear industry and allows the company to increase its profits through the sale of different products. Another advantage of manufacturing a number of product lines is the reduction of risk in that if one product fails there are numerous other products to compensate for this loss. Companies in the apparel and footwear industry that concentrate on manufacturing a single product are at a great disadvantage since their revenues depend exclusively on the sales of only one type of product, therefore, increasing the potential default risk. NIKE designs most of its footwear for athletic use; however, in order to diversify its products, a large percentage of their products come from sales of footwear, apparel, and accessories for casual and leisure purposes. The company segments its products in variety of ways. First of all, it manufactures sports goods and accessories for three different groups of people: men, women and children. Each segment is carefully examined in terms of physical capabilities, sociological needs, and design preference. Another type of segmentation used by NIKE that helps to increase product diversification is achieved by offering footwear, apparel, accessories, such as NIKE watches or gym bags, as well as performance
equipment, including sport balls, timepieces, eyewear, skates, bats, gloves, and others in virtually every type of sport: running, basketball, tennis, golf, soccer, baseball, football, bicycling, volleyball, wrestling, cheerleading, aquatic activities, hiking, fencing, and others. Besides the two segmentations described above, NIKE also has agreements for licensees to produce and sell NIKE brand items aside from athletic footwear and apparel. In part, this product differentiation is accomplished through strategic management planning by having the company sell NIKE brand timepieces, children’s clothing,
school
supplies,
electronic
media
devices,
and
other
items.
NIKE subsidiaries, such as Bauer NIKE Hockey Inc., are yet another way the company segments its product lines. Specifically, the Bauer NIKE Hockey Inc. subsidiary manufactures and distributes ice skates, skate blades, in-line roller skates, protective gear, hockey sticks and many other licensed apparel and accessories that make NIKE stand out in its industry.
Brand Value Scale: Nike is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities. Nike is classified as a universal brand; it embodies the category of sportswear worldwide, with a high level of awareness and recognition by its clients with a well defined character: “exciting, spirited, cool, innovative, and aggressive” with as a promise to bring inspiration and innovation to every athlete in the world.
Conclusion Nike Founder Bill Bowerman's statement is congruent with Nike's design, advertising and branding techniques because of its multi-dimensional meanings. Bowerman wanted to inspire a global participation in sport, however connotatively, he was alerting the world, "if you have a body, you are potential Nike customer". These twotiered interpretations are similar to Nike's use of design, advertising and branding techniques found in the downtown NikeStore. Their aim is to target an audience by creating myths to appeal to their particular ideals. Nike does not run free and clear with its dubious strategies, however. These tactics are constantly critiqued by anti-Nike discourse that wants to reveal the truth behind Nike's self-portrayal as a conscientious corporation. Activists such as Ad-Busters have used ad campaigns to defraud Nike and its Swoosh by making the public aware of their labor injustices and sweatshop scandals. These groups aim to debunk the Nike myth. They want to show that the
ideals of power and prestige are not naturally part of the Nike image and that billions of dollars are spent to coerce the public into purchasing their brand name and product.
